India is the fifth largest preferred retail destination globally. By 2012, the total market size of the retail industry in India had reached US$ 0.5 trillion, registering a compound annual growth rate (CAGR) of 7 per cent since 1998. The market in India is expected to touch US$ 1.3 trillion by 2020.
Of the overall retail market in India, unorganised players controlled 92 per cent market share during 2012. Organised retail is expected to account for 20 per cent by 2020. Rapid emergence of mega malls and hypermarkets are augmenting the growth of organised retail in the country.
India’s strong growth fundamentals along with increased urbanisation and consumerism have opened immense scope for retail expansion for foreign players. The Government of India has approved 51 per cent foreign direct investment (FDI) in multi-brand retail and increased FDI limit to 100 per cent in single brand retail and cash and carry operations.
With growing investment in infrastructure, retailers will be able to increase their access to high-growth potential rural market. The market constitutes over 33 per cent of the FMCG consumer base in India. Further, E-commerce is expected to be the next major area for retail growth in India with online retail estimated to reach US$ 70 billion by 2020.